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Sensex, Nifty firm; Hindalco up 3%, Reliance ITC drag


The News International Team

9:55 am Excise duty hike? Credit Suisse warns ITC may see de-rating if excise duty on cigarette is hiked over 15 percent indicating headwinds likely to continue for some more years. The brokerage feels that such an increase will signal an aggressive anti-cigarette agenda where cigarette prices have already gone up 75-100 percent in the past three years and it will be hard to pass on another 15-20 percent hike.

“In this scenario we could see ITC de-rate as headwinds would continue for some more years,” it says in a note.

However, maintaining an outperform rating Credit Suisse says in the past ten years, every dip in the stock on a high tax increase was an opportunity to buy but this time it is different.

9:30 am  Market outlook: Corporate earnings for the December quarter have been the worst since the global financial crisis, leading to a sense of frustration within India Inc.
That is because the effects of policy reforms are still not visible on the ground.

Morgan Stanley’s Ridhan Desai however feels the earnings data does not reflect the complete picture and that the capex cycle is slowly picking up.

“Fixing inflation has caused growth to weaken in the short run (inevitable pain), but has set up India for better growth in the coming months. Remedying stalled projects was a more complex problem, but recent capex data shows that things are turning,” writes Desai in a Morgan Stanley note to clients.

Don’t miss: FM may dole out tax sops in Budget to win over middle class

The market has opened the most crucial Budget week on a firm note.The Sensex is up 65.28 points at 29296.69 and the Nifty is up 23.25 points at 8856.85. About 500 shares have advanced, 126 shares declined, and 119 shares are unchanged.

Hindalco, Tata Power, BHEL, Infosys and Tata Steel are top gainers in the Sensex. Among the losers are Reliance, ITC, Bajaj Auto and Dr Reddy’s Labs.

The Indian rupee opened flat at 62.20 per dollar versus 62.22 Friday.

The euro held steady, rising initially in relief following a conditional loan extension deal for Greece, but losing steam as caution towards the debt saga persisted.

Pramit Brahmbhatt of Veracity said, “Investors are likely to be cautious ahead of a series of data due for the week. Rupee is expected to trade rangebound to slightly weak taking cues from a strong dollar. Range for the rupee is seen between 61.80-62.80/dollar.”

Global cues are positive with the Wall Street having closed at record highs after Greece got yet another lifeline as the Euro-group agreed to extend the bailout package by four months, contingent on reform measures by Greece.

Asian markets are positive in morning trade but volumes are low with China, Taiwan markets being closed for the Chinese New Year holiday.

Nymex crude futures dropped as Libya resumed oil exports from the eastern port of Zuei-Tina thereby adding to the global glut. Brent crude hovered around USD 60 dollars per barrel.
Precious metal gold’s prices fell towards USD 1200 an ounce after euro ministers and Greek officials reached an agreement to extend Greece’s financial rescue by four months.


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